The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) remanded the case for reassessment regarding Rs. 9.74 lakh in unexplained cash deposits made during the demonetization period,allowing the assessee to submit supporting evidence for the deposits.
Manju Devi Chandak,appellant-assessee,was engaged in the business of trading food products and spices. She filed her income tax return for the assessment year 2017-18, declaring a total income of Rs. 7,87,780/-. Her case was selected for scrutiny due to large cash deposits made during the demonetization period. Notices under sections 143(2) and 142(1) were issued, but the assessee did not provide supporting documents for the cash deposits.
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As a result, the Assessing Officer ( AO ) added Rs. 9,72,964/- to her income and disallowed a deduction of Rs. 1,55,185/- for lack of evidence. The assessee appealed to the Commissioner of Income Tax (Appeals)[CIT(A)], who partially allowed the appeal. The addition related to cash deposits was dismissed, but the CIT(A) directed the AO to verify the deductions under sections 80C and 80TTA of the Act.
Dissatisfied with the decision of the CIT(A) the assessee appealed before the tribunal.
The assessee’s counsel stated that the assessee transitioned from consignment-based spice trading to direct sales after gaining market experience. A comparative profit chart for AYs 2014-15 to 2017-18, along with supporting documents, was submitted. The counsel explained that the assessee did not receive any notices from the AO, which prevented them from submitting the necessary evidence, resulting in the addition of Rs. 9,74,157/-. The CIT(A) upheld the addition. The counsel requested that the assessee be allowed to submit the required documents to support their claim.
The tribunal reviewed the case of the assessee, who was engaged in trading food products and spices. The assessee submitted a comparative chart of profit ratios for FYs 2013-14 to 2016-17, along with a Chartered Accountant ( CA )’s certificate and audited financial statements for the same years.
The appellate tribunal noted that the assessee’s business involved cash transactions, with regular cash deposits made into bank accounts. The counsel for the assessee explained that during the demonetization period, a total of Rs. 41.50 lakh was deposited, with Rs. 9 lakh in old currency and Rs. 32.50 lakh in new currency.
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The two member bench comprising Pradip Kumar Choubey ( Judicial Member ) and Rakesh Mishra ( Accountant Member ) found that the CIT(A) had dismissed the assessee’s claim and upheld the AO’s addition of Rs. 9,74,157/- due to lack of documentary evidence for the cash deposits and low profit. The assessee’s counsel argued that the notices from the AO were not received, preventing the submission of documents.
Based on the facts and documents presented, the tribunal decided that the assessee should be allowed to submit the required documents to the AO, set aside the AO’s order, restored the case for a fresh hearing, and directed the AO to review the documents and issue a new order.
In short,the appeal filed by the assessee was allowed for statistical purposes.
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